10 Easy Ways to Spot A Scam & How To Protect Yourself

 

For as long as people have had money (or anything of value), there have been scammers trying to take it. In the 21st century, millions of people are defrauded each year by scammers who are after their hard-earned money — or their personal data, which has become increasingly valuable in our technology-driven world.

In 2018, the Federal Trade Commission collected more than 1.4 million reports of fraud or attempted fraud, and 25 percent of the people who filed those reports said they lost money. In fact, people who filed reports with the FTC said they lost a collective $1.48 billion to fraud in 2018. Yes, that’s billion with a “B.”

Younger people are scammed more often, but lose less per incident.

But don’t be too scared by those statistics. While anyone can fall victim to a scam, the best thing you can do to protect yourself is to know how to spot scams in the first place, so you can steer clear of fraudsters looking to get their hands on your data or assets. In this guide, we’ll look at some of the most common scams reported to the FTC, how you can spot them, and the steps you can take to help keep yourself from ever falling victim to a scammer.

9 Common Types of Scams and What to do About them

There are tons of different scams out there, and fraudsters are constantly coming up with clever new ways to trick consumers. That’s why it’s impossible for us to provide a completely comprehensive list of all the scams you should look out for.

But these ones are the most common ways scammers will try to take advantage of consumers, and by learning the warning signs and how to protect yourself from these common scams, you’ll have a good foundation of knowledge in place for avoiding other types of scams, too.

Phone Scams

Phone scams can come as calls or text messages, and the scammers at the other end of the line are typically trying to steal your personal information.

Common phone scams:

There are tons of phone scams out there, so these are just a few common types that you might encounter.

  • Someone claiming to work for a company or organization that you trust, like your bank, a police department, or a government agency.
  • Someone offering you a prize or vacation.
  • Someone offering you a business opportunity.
  • Someone threatening that you’ll be sued or arrested if you don’t pay money immediately.
  • Someone beginning the call by asking, “Can you hear me?” They want you to say yes so they can record your voice and use it to trick automated systems, or claim you agreed to offers or loans.

How to identify a phone scam:

Phone scams can be really tough to identify! That’s why, if you receive a phone call that seems even a little bit suspicious, you should just hang up. You can then search for contact information for the agency that called and reach out to them yourself to see if the call was legit.

Keep in mind that if you owe money to the IRS or another government agency, they will always contact you by mail, and never by phone. If you receive a phone call saying you need to pay taxes you owe, it’s absolutely a scam.

Phone scams Do’s and Dont’s

How to report a phone scam:

The FTC is the government body that collects evidence about phone scams in order to stop them. If you’re contacted by a phone scammer, report it to the FTC online, or by calling 1-877-382-4357.

Email Scams

As more and more people are online, email scams are becoming more prevalent, sophisticated, and harder to spot.

Common email scams:

  • Someone claiming to work for a company or organization that you trust, like your bank, a police department, or a government agency.
  • Someone offering you a prize or vacation.
  • Someone offering you a business opportunity.
  • Phishing! This is the name for when you get an email disguised to look like it’s coming from a website you trust, asking for your bank information, login, or other personal information.

How to identify an email scam:

Email scams can be really tough to identify, just like phone scams. Many scam emails look really legitimate, because they copy the text and images from the websites they’re trying to imitate.

  • Carefully inspect the email address and make sure it’s from the actual website of the company.
  • Look for typos, or vague wording like “Dear Customer.”
  • Hover over links to make sure they’ll send you to the company’s official website, and nowhere else.
Email scams do’s and don’t’s

How to report an email scam:

The FTC oversees email scams. If you receive one, report it online. If you receive a phishing email, forward it to the FTC at spam@uce.gov and to the Anti-Phishing Working Group at reportphishing@apwg.org.

Banking Scams

Banking scams are typically attempts to steal money by accessing your bank account.

Common banking scams: 

  • Phishing, when you receive an email that looks like it’s from your bank, asking you to enter your account number or login information.
  • Someone sending you a check, asking you to deposit it and then wire a portion of the money back to them (typically these are bad checks, which means you lose the money you wired and have to cover the cost of the check).
  • Someone sends you a check for no reason. By cashing it, you may be signing up for a loan you didn’t want.
  • Someone signs you up for a free trial, but sets up an automatic debit from your bank account that you don’t consent to.

How to identify a banking scam:

  • Be wary of anything that asks for your bank account number, from an email to a free trial to a prospective employer.
  • Never deposit a check if you don’t know where it came from or you don’t know why you received it.
  • Don’t deposit checks for strangers, and never deposit a check for anyone who wants you to do so and then wire them money.
Don’t give your bank account number to anyone who calls or emails you.

How to report a banking scam:

There are different agencies and ways to report banking scams, depending on how the scammer attempted to reach you.

If you receive a fake check in the mail, report that to the U.S. Postal Inspection Service. You should also report those and any other fake checks to the FTC, either online or by phone at 1-877-382-4357.

If you have given out your bank account information to someone you think might have been a scammer, contact your bank immediately to let them know. They may recommend freezing or closing your accounts.

Charity Scams

Scammers know there’s an opportunity to take advantage of others’ generosity, which is why charity scams are so common.

Common charity scams:

  • Someone sets up a fake organization.
  • Someone organizes a fake fundraiser in the wake of a tragedy or disaster.

How to identify a charity scam:

  • Check with your state consumer protection office or the IRS’s list of 501(c)3 organizations to make sure the charity is legitimate.
  • Carefully check the charity’s name and website. Watch out for typos, and keep in mind that it’s common for scammers to set up fake charities with names that are very similar to real charities.
  • When giving to support victims of a tragedy or disaster, look for fundraising information in newspaper reports, not social media.
Carefully check the name of all charities before making donations.

How to report a charity scam: 

If you think you’ve identified a charity scam, you should report it to the FTC so they can investigate it. You should also report it to any local consumer protection agencies you have in your area.

If the scam is because of a natural disaster, you can also report it to the National Center for Disaster Fraud.

Ticket Scams

Buying tickets to concerts, sports games, and other events is something lots of people do regularly, but it also puts you at risk for ticket scams, which are generally when you pay for a ticket but never receive one.

Common ticket scams:

  • Someone creates real-looking counterfeit tickets and sells them on resale markets.
  • Someone sells duplicates of a legitimate ticket to several different buyers.
  • Someone pretends to be selling a ticket in order to steal your personal information.

How to identify a ticket scam:

  • Carefully examine ticket resale websites. Some scammers create websites that look very similar to official resale sites that exist. Check and double check the URL before purchasing a ticket from a third party.
  • Verify that the seller has a real phone number and a physical address that exists.
  • Try to research the seller. Do a web search for their name, phone number, or email address, along with words like “fake,” “fraud,” “scam,” and “fake tickets.”
  • Verify as much information about the tickets as possible before you buy them. Make sure the date and time are correct, and that the seat section and number actually exist at the venue.
  • Meet in person to purchase tickets whenever possible. Scammers won’t often want their victims to see them in person.
  • Request proof of purchase if you’re buying tickets secondhand. Scammers generally won’t be able to provide a receipt from the box office, while a legitimate seller should be able to do so.
Remember: Credit cards offer you protections, like being able to dispute the charge if needed.

How to report a ticket scam:

The process for reporting a ticket scam depends on where and how you purchased the fake tickets. No matter what, you should contact your state or local consumer protection office.

If you bought the tickets online, you should file a complaint with the FTC.

If you bought fake tickets from someone in person and can describe them or you have a picture of them, file a local police report.

Rental Scams

Moving is already stressful enough, but looking for an apartment or home to rent can put you at risk for some more common scams.

Common rental scams:

  • Someone posts a fake rental listing to attempt to get you to pay an application fee, deposit, rent, or all of the above.

How to identify a rental scam:

  • Ask the landlord to meet in person. If they don’t want to, that’s a big red flag.
  • Ask to tour the property. Most rental scammers will try to get you to agree to move in right away without seeing the home (because it doesn’t actually exist).
  • Research typical prices for the area the rental is listed in. Scam rentals are often advertised at a price that seems too good to be true (because it is).
  • Look for typos, bad grammar, and excessive punctuation in listings.
Rental scams do’s and don’t’s

How to report a rental scam:

You should report all rental scams to the FTC so they can investigate.

If you lost any money, file a local police report. And contact any sites where you saw the rental listing so they can take it down and block the poster, hopefully helping protect others from falling victim to the same scam.

Lottery and Sweepstakes Scams

One of the most common types of scams that you’ll likely come across at some point in your life is a lottery or sweepstakes scam. Here’s what to look out for.

Common lottery and sweepstakes scams:

  • Someone sets up a fake contest, lottery, or sweepstakes, trying to get you to enter your personal information. Usually a prize is offered.
  • Someone claims you have won a prize or a lottery, but you need to pay a fee to collect your winnings.

How to identify a lottery or sweepstakes scam:

Lottery and sweepstakes scams can be some of the hardest to identify because they can come from so many different sources: mail, phones, email, robocall, text message, online ad, etc. Plus, there are legitimate sweepstakes, contests, and lotteries out there, which can make it tough to weed out the illegitimate ones.

  • If you won something but you never entered a contest for it, it’s probably a scam.
  • If you’re required to pay a fee to get your money or prize, it’s probably a scam.
  • Check the postage if you received a notice in the mail. If it was sent bulk rate, it’s likely a scam.
Register your phone number with the National Do Not Call Registry.

How to report a lottery or sweepstakes scam:

How you report this type of scam will depend on how it was sent to you.

You should always report it to the FTC, either online or by phone at 1-877-382-4357.

If the scam was sent to you by mail, you should report it to the U.S. Postal Inspector Service.

If the scam reaches you by phone, you should report the number to both the FTC and the National Do Not Call Registry. Make sure your number is listed on the registry while you’re at it.

You may also want to report the scam to your local consumer protection bureau. That’s the agency that’s most likely to investigate an individual case.

Investment Scams

We all know that making smart investments is a good way to plan for a financially sound future. Investment scams prey on that.

Common investment scams:

  • Someone contacts you unsolicited to offer an investment opportunity that they say will get you rich with little-to-no risk.
  • Pyramid schemes and ponzi schemes (more on those below).

How to identify an investment scam:

  • If the person offering the investment opportunity contacted you seemingly out of the blue, it’s likely a scam.
  • Words like “guaranteed earnings” and “risk-free” point to an investment being a scam, because no real investment is 100 percent guaranteed to make you money.
Your state securities regulator is a good place to start researching investment opportunities.

How to report an investment scam:

Investment opportunities generally fall under the purview of the Securities and Exchange Commission (SEC). If you encounter an investment scam, that’s who you should contact.

You may also want to get in touch with your state’s securities administrator.

Pyramid Schemes and Ponzi Schemes

Pyramid schemes and Ponzi schemes are two common types of investment scams. Here’s what they look like:

  • Pyramid schemes require participants to recruit new members, and those recruits’ “investments” pay “profits” to people who have been in the scheme for longer. When no more new recruits can be added, the scheme will collapse, and it’s mathematically guaranteed that will happen eventually.
  • Ponzi schemes are similar to pyramid schemes in that “investments” from newly recruited members are used to pay “returns” to older members. Ponzi schemes will collapse either when there are no new recruits available, or when too many older members cash out and deplete the scheme’s funds.
Pyramid scams do’s and don’t’s

How to identify a pyramid or Ponzi scheme:

  • Proceed with caution if you get paid for recruiting new members, or if you’re required to recruit new members in order to get your money back or increase your profits.
  • Find out if the company makes money from the sales of its products to customers, or from the sales of its products to salespeople (who might be called distributors or consultants).
  • If you don’t understand an investment opportunity or can’t get complete information about it, it may be a scam.

How to report a pyramid or Ponzi scheme:

Report pyramid schemes to the FTC and your state consumer protection office.

Report Ponzi schemes to the SECthe Financial Industry Regulatory Authority, and your state’s securities administrator.

10 Easy Ways to Protect Yourself from Scams

Print or save this scam avoidance cheat sheet to help remember the 10 things you should always do to protect yourself.

1. Know how to spot fakers. Many scammers pretend to be someone you know and trust, like a friend, family member, bank, or government agency. Don’t give them money or personal information until you’ve confirmed that a request is coming from who you think it’s coming from.

2. Research. One of the best ways to spot fakes is by doing online searches for phone numbers, email addresses, organizations — whatever information you have about the potential scammer.

3. Don’t trust caller ID. It’s easy for scammers to “spoof” your caller ID, or make it look like they’re calling from a number you know. Don’t take that as proof the caller is trustworthy.

4. Wait before you pay. Many scammers will pressure you to give them money immediately. If you’re suspicious, tell them you’ll get back to them, then do your research before anything else.

5. Talk to someone. In addition to doing your research, talk to a friend or family member about the request you received. They’ll be able to help you decide if anything seems fishy.

6. Pay safely. When you do pay a person or organization online, use a credit card. Credit cards from with better fraud protections than many other forms of payment. Avoid paying in cash or using a wire service, since it’s very hard to get your money back if you do.

7. Hang up the phone. If a phone call seems suspicious, just hang up. Independently find contact information for the person or organization that claimed to be calling you, and call them back yourself to verify the call.

8. Avoid free trial offers. Many times, free trials are ways for unscrupulous companies to sign you up for monthly charges that begin immediately after the trial period ends. Don’t sign up for any free trials unless you know the company has a good reputation and you’ve read their cancelation policy.

9. Be careful with checks. It’s a good rule of thumb to just not accept checks from people you don’t know. Definitely don’t even accept a check from a stranger who wants you to deposit it and wire them back some of the money.

10. Stay in the know. Sign up for scam alerts from the FTC at ftc.gov/scams. Then you’ll get the latest safety tips and alerts sent straight to your inbox.

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